Buying a home is typically the most significant transaction people make. Not only are you spending a massive amount of money, but you will also walk away owning a home for which you will be completely responsible.
As such, it is crucial that home-buyers and sellers proceed with caution when it comes to signing a purchase agreement. Failure to understand or read certain clauses could prove to be a costly mistake you could be paying for for the rest of the time you own your home. Below are four such components that could prove to be problematic.
Waived contingencies: Contingencies give buyers an opportunity to back out of a transaction if financing falls through, an inspection reveals problems with the home or the appraisal value is lower than the sale price. If a buyer agrees to waive these contingencies, he or she should be prepared to take on the risks that come with that decision.
Kick-out clause: This clause allows a seller to continue showing a home even after a buyer has agreed to purchase the home. Sellers might include this clause when the buyer includes a home sale contingency with an offer, meaning he or she needs to sell a home in order to buy the new one. This clause allows a seller to “kick out” the buyer and accept a different offer within a specific period of time.
Arbitration clauses: Parties who agree to these clauses agree to arbitrate their issue versus taking the matter to court. Arbitration can be less draining – financially and emotionally – than litigation, but it also can be more limiting in ways that could adversely impact buyers.
Inclusions: An inclusion addresses personal property that either stays with the home in the sale or must be removed by the seller. As this article on unusual real estate clauses notes, inclusions can be unfavorable or beneficial. Buyers might get stuck with strange or hard-to-remove items, or the inclusions could make a home more desirable.
These and other components make real estate contracts quite complicated. In order to ensure you don’t wind up facing the consequences of undesirable terms, it can be a wise decision to review a contract with an experienced real estate attorney before you sign it.